Fast delivery has become the norm in South Korea, according to experts at HLTS South Korea. Online shops are facing a common, yet rather painful, ‘conflict of expectations’: customers have come to expect their orders to arrive within a couple of days, but cross-border dropshipping cannot meet these deadlines. International delivery, customs procedures and order processing by the supplier extend the process by 5–7 days. Any delay means losses, poor reviews and, as a result, a blow to a reputation that can take years to build but be lost in an hour.

The solution is hybrid logistics: some goods are stored in a local warehouse, whilst others are supplied directly from the supplier. In this article, we’ll explore the benefits of a hybrid approach and how to properly assess the financial viability of such a transition.

HLTS Co. Ltd operates in the South Korean market, working directly with dropshippers, retailers and online shops from various countries and continents. The company’s specialists speak Korean and assist partners and customers with all aspects of their business in Korea.

This does not mean moving your entire product range to a domestic warehouse. Start with 3–5 top-selling products that generate the highest profit. According to experts at HLTS Ltd, this will simultaneously reduce risks and speed up the sale of popular items.

To do this, assess the following:

• the number of orders per month and the average order value
• the average percentage of abandoned purchases due to long delivery times
• the potential number of ‘saved’ sales
• monthly warehousing costs

International delivery time: 5–7 days; local delivery (e.g. from a warehouse in Seoul): 1–2 days.

South Korean shoppers are used to fast delivery within one or two days. Given that courier deliveries account for over 90 % of all online orders in South Korea, this is a key competitive factor.

And this standard, which has become the norm, poses a problem for traditional dropshipping, especially when the supplier is based outside the country. International delivery takes longer, and Korean shoppers are extremely sensitive to delivery times, particularly in the electronics and fashion sectors. Even with an attractive price, the difference between a 3–7 day delivery and a 1–2 day delivery can mean a loss of conversions and an increase in cart abandonment.

The hybrid logistics model is a combination of dropshipping and retail: some goods are dispatched, as usual, by the supplier or intermediary from their own warehouse, whilst others are stored in a local warehouse in South Korea.

This could take the form of:

• The shop’s own warehouse (small premises in Seoul or another major city)
• A fulfilment centre (3PL provider), where goods are received, stored, picked and dispatched nationwide. Integration with e-commerce platforms (Naver Smart Store, Coupang, Shopify)

Hybrid logistics models are not a one-size-fits-all solution, according to experts at HLTS. They should only be implemented after careful calculation, having weighed up all the pros and cons.

Firstly, it is worth assessing the sales volumes for each product. If certain items consistently generate orders that are repeated on a weekly basis, it may be more cost-effective to keep them in a local warehouse.

Secondly, it is important to take logistics costs into account. In South Korea, due to high urbanisation density, the average cost of the last mile is higher than the global average, at approximately $2–$2.7 per parcel. If goods are stored locally, part of these costs is offset by an increase in conversion rates at checkout and a reduction in returns due to delays.

A third important factor is the reduction in order cancellations and returns. According to experts at HLTS, when a customer learns (most often from reviews) that the goods are located in Korea, they place greater trust in the seller.

The hybrid model has not only advantages but also disadvantages:

• you need to have a good understanding of the market and customer needs, and purchase stock in advance
• warehousing costs and stock management are more complex than with pure dropshipping.
• if products do not sell well, capital is ‘tied up’ in stock

Fulfillment centre:

• you need to pay for the storage and handling of each item
• monitoring stock levels and quality sometimes requires integration with an accounting system

That is why it is important to take a strategic approach to this model: rather than transferring your entire product range, start with 1–3 of your best-selling items, as recommended by the experts at HLTS South Korea.

The South Korean market has a well-developed logistics infrastructure and a large number of operators ready to work with online shops of all sizes. Many retailers use large warehouse networks and fulfilment centres, which provide storage, packaging and nationwide delivery within optimal timeframes.

HLTS Co. Ltd helps to find warehouse space, enters into contracts with fulfilment centres on behalf of the client, oversees logistics and helps dropshippers sell their goods at the best possible price.

The hybrid model is a way to take your business to the next level: you retain the advantages of dropshipping whilst simultaneously overcoming its weaknesses through local warehouses and faster delivery. In the South Korean market, this is no longer simply the ‘best option’ - it is an approach that helps meet consumer expectations and build a sustainable, profitable business model.